Originally from The Reasoned Arbitration Award in the United States: Its Promise, Problems, Preparation and Preservation

The first three chapters illustrate why reasons matter. Chapter One contains a working definition of reasoned awards, one that the parties and their lawyers can adapt to their own use. The definition should serve as a benchmark for testing awards for inadequate reasoning, as raw material for providers who want to build their own definition, and as a standard courts can use to fix today’s ineffectual judicial standard of reviewing awards for reasons. Parties and counsel who want a definition of reasoned awards that should be sufficient to make arbitrators truly explain themselves will find all they need in Chapter One’s definition. Chapter One also illustrates the way courts should enforce the requirement of reasons, with examples from courts that have done just that. 

(... Chapters One and Four together contrast the two main judicial approaches to reviewing awards for reasons: Chapter One discusses opinions that screen efficiently for reasons, Chapter Four the opinions that espouse the dominant but defective Cat Charter approach.)

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Chapter 1.   Reasoned Awards, Properly Defined and Enforced 

The reasoned award should be the crown jewel of arbitration. 

Of the three common forms of award, the first, the standard award, gives no reasons and therefore does not let anyone judge the quality of the arbitrators’ work. Standard awards therefore do not show the parties that they have been heard.

Traditionally, the popularity of unexplained awards has been a peculiarly American phenomenon not seen in international arbitration.  Even as late as 2015, a thoughtful New York federal judge still was stating the belief that “the [default] rule in an arbitration in which the parties have not requested a specific form of award is that the arbitrator may issue a ‘standard’ award (also referred to as a ‘general,’ ‘regular,’ or ‘bare’ award) that simply announces the result.”  Rules and practices have been evolving toward reasoned awards for decades, however, and it is inaccurate, as this book demonstrates, to keep calling the standard award the presumptive or default standard award form in American arbitration. 

The unusual tilt toward standard awards extends even further. Even when arbitrators know that they have to write a reasoned award, too many arbitrators, accustomed to thinking of reasons as a source of vulnerability, approach reasons as an evil to be minimized in order to protect the award against vacatur.

At the opposite end of the detail scale, findings of fact and conclusions of law are often portrayed as the ultimate in arbitrator reasoning. Yet parties in commercial arbitration and in most kinds of industry-specific arbitrations rarely request such awards. Findings and conclusions can become encrusted with formality in their separation of law from fact and a tendency to break even small steps of reasoning into separate (and numbered) paragraphs. In substance, there is no reason why skillfully prepared reasoned awards and findings and conclusions could not be almost identical. Findings and conclusions usually are more detailed, though, and can contain too much reasoning on incidental matters.

This leaves the reasoned award as the form that can be modified most readily to fit the circumstances of different cases, still contain enough substance to explain meaningfully why the arbitrators ruled as they did, and be prepared with reasonable cost and speed. Reasoned awards are the main form of reasoned decision-making in arbitration. Yet in spite of the important role that reasoned awards play today, the most commonly cited opinion on the standard for reasoned awards, the Eleventh Circuit’s opinion in Cat Charter, LLC v. Schurtenberger,  as well as the Fifth Circuit’s similar, close-on-the-heels opinion in Rain CII Carbon, LLC v. ConocoPhillips,  the Second Circuit’s opinion four years after Rain in Leeward Construction Co. v. American University of Antigua – College of Medicine,  and opinions from other courts in the same school of thought have adopted a definition of reasoned that is so broad and all-embracing of awards that it virtually guarantees that almost any award, including many unreasoned awards, will be treated as reasoned.  

Fortunately, some other courts have enforced meatier requirements for “reasoned” and properly made silent arbitrators who issue bashful awards, when reasoned awards were required, redo their work. This chapter provides a definition of “reasoned” that should secure adequate reasoning. Courts that honor the definition will avoid the perils of the far-too-loose standard used by the Eleventh, Fifth, and Second Circuits, their followers, and the Sixth Circuit in an earlier case styled Green v. Ameritech Corp.  This chapter illustrates the proper approach to reasoned awards by analyzing opinions that did properly vacate awards for failures of reasoning.